Data Reporting Services Regulations, 2017

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 19,925, 22 ta’ Diċembru, 2017

Taqsima B

L.N. 391 of 2017

FINANCIAL MARKETS ACT

(CAP. 345)

INVESTMENT SERVICE ACT

(CAP. 370)

Data Reporting Services Regulations, 2017

IN EXERCISE of the powers conferred by article 49 of the

Financial Markets Act and article 12 of the Investment Services Act,

the Minister responsible for the regulation of financial services,

acting on the advice of the Malta Financial Services Authority, has

made the following regulations

(1)

The title of these regulations is the Data Reporting Title, scope and

commencement.

Services Regulations, 2017.

(2) The purpose of these regulations is to transpose and

implement Article 4(1) paragraphs (20), (52) to (54), Article 59(1)

and (2), the first and third sub-paragraphs of sub-article (3) and 59(4),

Article 60, Article 61(1) to (3), Article 62, Article 63(1), (3), (4) and

(5), Article 64(1) to (5), Article 65(1) to (5) and Article 66(1) to (5) of

MiFID as herein defined, and they shall be interpreted and applied

accordingly.

(3) These regulations shall come into force on the 3rd January

2018.

(1)

In these regulations unless the context otherwise Definitions.

requires

"the Acts" means the Financial Markets Act and the Investment Cap. 345.

Services Act;

"APA" means a person authorised under these regulations to

provide the service of publishing trade reports on behalf of

investment firms pursuant to Articles 20 and 21 of MiFIR;

"ARM" means a person authorised under these regulations to

provide the service of reporting details of transactions to competent

authorities or to ESMA on behalf of investment firms;

"CTP" means a person authorised under these regulations to

provide the service of collecting trade reports for financial

instruments listed in Articles 6, 7, 10, 12, 13, 20 and 21 of MiFIR

from regulated markets, MTFs, OTFs and APAs and consolidating

them into a continuous electronic live data stream providing price and

volume data per financial instrument;

"data reporting services" shall mean

(i)

operating an APA;

(ii)

operating a CTP;

(iii)

operating an ARM;

"data reporting services provider" means an APA, a CTP or an

ARM;

"ESMA " means the European Securities and Markets Authority

established by Regulation (EU) No 1095/2010 of the European

Parliament and of the Council of 24 November 2010;

"home Member State " means, in the case of a data reporting

services provider

(a)

if the data reporting services provider is a natural

person, the Member State or EEA State in which its head office

is situated;

(b)

if the data reporting services provider is a legal

person, the Member State or EEA State in which its registered

office is situated;

(c)

if the data reporting services provider has, under its

national law, no registered office, the Member State or EEA

State in which the head office is situated;

"investment firm" means any person, other than persons to

whom MiFID does not apply in terms of Article 2 of the said

Directive, whose regular occupation or business is the provision of

any one or more investment services to third parties on a professional

basis;

"management body" means the body or bodies of a data

reporting services provider which are appointed in accordance with

Maltese law, which are empowered to set the entity’s strategy,

objectives and overall direction, and which oversee and monitor

management decision-making and include persons who effectively

direct the business of the entity;

"MiFID" means Directive 2014/65/EU of the European

Parliament and of the Council of 15 May 2014 on markets in financial

instruments as amended from time to time and includes any

implementing measures that may have been or may be issued

thereunder;

"MiFIR" means Regulation (EU) No 600/2014 of the European

Parliament and of the Council of 15 May 2014 on markets in financial

instruments as amended from time to time;

"systematic internaliser" means an investment firm which, on

an organised, frequent systematic and substantial basis, deals on own

account when executing client orders outside a regulated market, an

MTF or an OTF without operating a multilateral system. The frequent

and systematic basis shall be measured by the number of OTC trades

in the financial instrument carried out by the investment firm on own

account when executing client orders. The substantial basis shall be

measured either by the size of the OTC trading carried out by the

investment firm in relation to the total trading of the investment firm

in a specific financial instrument or by the size of the OTC trading

carried out by the investment firm in relation to the total trading in the

Union in a specific financial instrument. This definition shall apply

only where the pre-set limits for a frequent and systematic basis and

for a substantial basis are both crossed or where an investment firm

chooses to opt-in under the systematic internaliser regime.

(2) Words and expressions used in the Acts shall, in these

regulations, have the same meaning as is assigned to them in the Acts.

Part I

Authorisation procedures for data reporting services providers

(1)

The provision of the data reporting services as a Requirement for

regular occupation or business shall be subject to prior authorisation authorisation.

granted in accordance with these regulations. The authorisation shall

be granted by the competent authority.

(2) Notwithstanding the provisions of sub-regulation (1), the

competent authority shall allow an investment firm or a market

operator operating a trading venue to operate the data reporting

services of an APA, a CTP and an ARM, subject to the prior

verification of their compliance with the provisions of these

regulations. This service shall be included in their licence.

(3) The competent authority shall keep a register of all data

reporting services providers. The register shall be publicly accessible

and shall contain information on the services for which the data

reporting services provider is authorised. It shall be updated on a

regular basis.

(4) The competent authority shall notify every authorisation

issued in terms of this Part of the regulations to ESMA.

(5) The competent authority shall supervise and shall keep

under review all data reporting services providers to provide their

services in terms of these regulations. It shall also ensure that data

reporting services providers comply at all times with the conditions

for initial authorisation prescribed in terms of these regulations.

(1)

The authorisation granted by the competent

authority shall specify the data reporting service which the data

reporting services provider is authorised to provide.

(2) A data reporting services provider seeking to extend its

business to additional data reporting services shall submit a request

for extension of its authorisation.

(3) The authorisation granted by the competent authority to a

data reporting service provider in terms of these regulations shall be

valid for the entire Union and shall allow a data reporting services

provider to provide the services, for which it has been authorised,

throughout the Union.

(1)

The competent authority shall not grant

authorisation unless and until such time as it is fully satisfied that the

applicant complies with all requirements prescribed in these

regulations.

(2) The data reporting services provider shall provide all

information, including a programme of operations setting out, inter

alia, the types of services envisaged and the organisational structure,

necessary to enable the competent authority to satisfy itself that the

data reporting services provider has established, at the time of initial

authorisation, all the necessary arrangements to meet its obligations

as prescribed in these regulations.

(3) Within six months from the date of the submission of a

complete application, the competent authority shall inform the

applicant in writing of its decision whether or not to grant a licence.

(1)

The competent authority may withdraw the

authorisation granted to a data reporting services provider where the

provider

(a)

does not make use of the authorisation within 12

months;

(b)

expressly renounces the authorisation;

(c)

has provided no data reporting services for the

preceding six months;

(d)

has obtained the authorisation by making false

statements or by any other irregular means;

(e)

no longer meets the conditions under which

authorisation was granted; or

(f)

has seriously and systematically infringed the

provisions of MiFID or of MiFIR.

(2) Where the competent authority has withdrawn an

authorisation in accordance with sub-regulation (1), it shall notify

ESMA thereof.

(1)

All the members of the management body of a data Requirements

reporting services provider shall at all times be of sufficiently good for

management

repute, possess sufficient knowledge, skills and experience and body

reporting

commit sufficient time to perform their duties.

services

provider.

(2) The management body shall possess adequate collective

knowledge, skills and experience to be able to understand the

activities of the data reporting services provider. Each member of the

management body shall act with honesty, integrity and independence

of mind to effectively challenge the decisions of the senior

management where necessary and to effectively oversee and monitor

management decision-making where necessary.

(3) Where a market operator seeks authorisation to operate an

APA, a CTP or an ARM and the members of the management body of

the APA, the CTP or the ARM are the same as the members of the

management body of the regulated market, those persons are deemed

to comply with the requirement prescribed in sub-regulation (1).

(4) A data reporting services provider shall notify the

competent authority of all members of its management body and of

any changes to its membership, along with all information needed to

assess whether the entity complies with the provisions of sub-

regulations (1) to (3).

(5) The management body of a data reporting services

provider shall be required to define and oversee the implementation

of the governance arrangements that ensure effective and prudent

management of an organisation including the segregation of duties in

the organisation and the prevention of conflicts of interest, and in a

manner that promotes the integrity of the market and the interest of its

clients.

(6) The competent authority shall refuse authorisation if it is

not satisfied that the person or the persons who shall effectively direct

the business of the data reporting services provider are of sufficiently

good repute, or if there are objective and demonstrable grounds for

believing that proposed changes to the management of the provider

pose a threat to its sound and prudent management and to the

adequate consideration of the interest of its clients and the integrity of

the market.

Part II

Conditions for APAs

(1)

An APA shall have adequate policies and

arrangements in place to make public the information required under

Articles 20 and 21 of MiFIR as close to real time as is technically

possible, on a reasonable commercial basis. The information shall be

made available free of charge 15 minutes after the APA has published

it.

(2) The APA must be able to efficiently and consistently

disseminate the information referred to in sub-regulation (1) in a way

that ensures fast access to the information, on a non-discriminatory

basis and in a format that facilitates the consolidation of the

information with similar data from other sources.

(3) The information made public by an APA in accordance

with sub-regulations (1) and (2) shall include, at least, the following

details

(a)

the identifier of the financial instrument;

(b)

the price at which the transaction was concluded;

(c)

the volume of the transaction;

(d)

the time of the transaction;

(e)

the time the transaction was reported;

(f)

the price notation of the transaction;

(g)

the code for the trading venue the transaction was

executed on, or where the transaction was executed via a

systematic internaliser the code ‘SI’ or otherwise the code

‘OTC’;

(h)

if applicable, an indicator that the transaction was

subject to specific conditions.

(4) The APA shall operate and maintain effective

administrative arrangements designed to prevent conflicts of interest

with its clients. In particular, an APA who is also a market operator or

investment firm shall treat all information collected in a non-

discriminatory fashion and shall operate and maintain appropriate

arrangements to separate different business functions.

(5) The APA shall have sound security mechanisms in place

designed to guarantee the security of the means of transfer of

information, minimise the risk of data corruption and unauthorised

access and to prevent information leakage before publication. The

APA shall maintain adequate resources and have back-up facilities in

place in order to offer and maintain its services at all times.

(6) The APA shall have systems in place that can effectively

check trade reports for completeness, identify omissions and obvious

errors and request re-transmission of any such erroneous reports.

Part III

Conditions for CTPs

(1)

A CTP shall have adequate policies and Organisational

arrangements in place to collect the information made public in requirements

CTPs.

accordance with Articles 6 and 20 of MiFIR, consolidate it into a

continuous electronic data stream and make the information available

to the public as close to real time as is technically possible, on a

reasonable commercial basis.

(2) The information referred to in sub-regulation (1) shall

include, at least, the following details

(a)

the identifier of the financial instrument;

(b)

the price at which the transaction was concluded;

(c)

the volume of the transaction;

(d)

the time of the transaction;

(e)

the time the transaction was reported;

(f)

the price notation of the transaction;

(g)

the code for the trading venue the transaction was

executed on, or where the transaction was executed via a

systematic internaliser the code ‘SI’ or otherwise the code

‘OTC’;

(h)

where applicable, the fact that a computer

algorithm within the investment firm was responsible for the

investment decision and the execution of the transaction;

(i)

if applicable, an indicator that the transaction was

subject to specific conditions;

(j)

if the obligation to make public the information

referred to in Article 3(1) of MiFIR was waived in accordance

with point (a) or (b) of Article 4(1) of that Regulation, a flag to

indicate which of those waivers the transaction was subject to.

(3) The information referred to in sub-regulation (1) shall be

made available free of charge 15 minutes after the CTP has published

it. The CTP shall be able to efficiently and consistently disseminate

such information in a way that ensures fast access to the information,

on a non-discriminatory basis and in formats that are easily accessible

and utilisable for market participants.

(4) A CTP shall have adequate policies and arrangements in

place to collect the information made public in accordance with

Articles 10 and 21 of MiFIR, consolidate it into a continuous

electronic data stream and make following information available to

the public as close to real time as is technically possible, on a

reasonable commercial basis including, at least, the following details

(a)

the identifier or identifying features of the financial

instrument;

(b)

the price at which the transaction was concluded;

(c)

the volume of the transaction;

(d)

the time of the transaction;

(e)

the time the transaction was reported;

(f)

the price notation of the transaction;

(g)

the code for the trading venue the transaction was

executed on, or where the transaction was executed via a

systematic internaliser the code ‘SI’ or otherwise the code

‘OTC’;

(h)

if applicable, an indicator that the transaction was

subject to specific conditions.

(5) The information referred to in sub-regulation (4) shall be

made available free of charge 15 minutes after the CTP has published

it. The CTP shall be able to efficiently and consistently disseminate

such information in a way that ensures fast access to the information,

on a non-discriminatory basis and in generally accepted formats that

are interoperable and easily accessible and utilisable for market

participants.

(6) The CTP shall ensure that the data provided is

consolidated from all the regulated markets, MTFs, OTFs and APAs

and for the financial instruments as specified by regulatory technical

standards issued pursuant to Article 65(8)(c) of MiFID.

(7) The CTP shall operate and maintain effective

administrative arrangements designed to prevent conflicts of interest.

In particular, a market operator or an APA, who also operate a

consolidated tape, shall treat all information collected in a non-

discriminatory fashion and shall operate and maintain appropriate

arrangements to separate different business functions.

(8) The CTP shall have sound security mechanisms in place

designed to guarantee the security of the means of transfer of

information and to minimise the risk of data corruption and

unauthorised access. The CTP shall maintain adequate resources and

have back-up facilities in place in order to offer and maintain its

services at all times.

Part IV

Conditions for ARMs

(1)

An ARM shall have adequate policies and Organisational

arrangements in place to report the information required under Article requirements

ARMs.

26 of MiFIR as quickly as possible, and no later than the close of the

working day following the day upon which the transaction took place.

Such information shall be reported in accordance with the

requirements laid down in Article 26 of MiFIR.

(2) An ARM shall operate and maintain effective

administrative arrangements designed to prevent conflicts of interest

with its clients. In particular, an ARM that is also a market operator or

investment firm shall treat all information collected in a non-

discriminatory fashion and shall operate and maintain appropriate

arrangements to separate different business functions.

(3) An ARM shall have sound security mechanisms in place

designed to guarantee the security and authentication of the means of

transfer of information, minimise the risk of data corruption and

unauthorised access and to prevent information leakage, maintaining

the confidentiality of the data at all times. The ARM shall maintain

adequate resources and have back-up facilities in place in order to

offer and maintain its services at all times.

(4) The ARM shall have systems in place that can effectively

check transaction reports for completeness, identify omissions and

obvious errors caused by the investment firm and where such error or

omission occurs, to communicate details of the error or omission to

the investment firm and request re-transmission of any such

erroneous reports.

(5) The ARM shall also have systems in place to enable the

ARM to detect errors or omissions caused by the ARM itself and to

enable the ARM to correct and transmit, or re-transmit as the case

may be, correct and complete transaction reports to the competent

authority.

Part V

Administrative Penalties, other measures and Appeals

(1)

Where a person falling within the scope of these

regulations fails to comply with any provisions of such regulations or

any rules issued thereunder further implementing such regulations,

the competent authority may, by notice in writing and without

recourse to a court hearing, impose on such person an administrative

penalty and other administrative measures in accordance with the

provisions of the Financial Markets Act (MiFID and MiFIR

Administrative Penalties, Measures and Investigatory Powers)

Regulations, 2017 or the Investment Services Act and Banking Act

(MiFID and MiFIR Administrative Penalties, Measures and

Investigatory Powers) Regulations, 2017.

€0.45